Bidders Line Up for Colombian Offshore Blocks



BOGOTA Sep 18, 2007 (Dow Jones Newswires)

Colombia's National Hydrocarbon Association or ANH, the government agency responsible for oil-licensing, auctioned exploration rights for several offshore blocks covering most of Colombia's Caribbean coast. The government is awarding rights on the basis of the highest royalty percentage offered. Companies are awarded 10-year concessions to explore for oil and gas. They will also hold production rights until the field is depleted.

A consortium of U.K.'s BP (BP), Brazil's Petroleo Brasileiro (PBR), or Petrobras, and Colombia's state oil company Ecopetrol won exploration and production rights for Block 4.

The consortium offered to pay the Colombian government a royalty equivalent to 16% of the value of oil and gas produced from the area, said the ANH.

The three companies also committed to invest at least $5.5 million in exploration.

Ecopetrol and BP will each own 35% of the venture, while Petrobras will own the remaining 30%.

BP PlC (BP) won rights for offshore Block 5. The oil company offered to pay the Colombian government a royalty equivalent to 12% of the value of oil and gas produced from the area and committed to invest at least $5.8 million in exploration. It was the sole bidder for block 5.

Brazil's Petroleo Brasileiro SA (PBR), Colombia's state-owned oil company Ecopetrol SA and U.S.-based Hess Corp. (HES) won the rights to Block 6.

The consortium offered to pay the Colombian government a royalty equivalent to 2% of the value of oil and gas produced from the area and committed to invest at least $5.3 million in exploration.

The group was the sole bidder for Block 6. Petrobras owns 40% of the group, while Ecopetrol and Hess each own 30%.

The same consortium of Petrobras, Ecopetrol and Hess also won Block 7. The consortium offered to pay the Colombian government a royalty equivalent to 11% of the value of oil and gas produced from the area and committed to invest at least $5.3 million in exploration.

The group was the sole bidder for block 7. Petrobras owns 40% of the group, while Ecopetrol and Hess each own 30%.

A consortium of India's state-run Oil & Natural Gas Corp. (500312.BY), Petrobras, and Ecopetrol were awarded the rights to Block 8. The consortium offered to pay the Colombian government a royalty equivalent to 4% of the value of oil and gas produced from the area and committed to invest at least $5.3 million in exploration.

ONGC and Ecopetrol will each own 40% of the venture, while Petrobras will own the remaining 20%. The consortium was the sole bidder for the block.

ONGC and Ecopetrol were awarded Blocks 9 and 10. For Block 9 the consortium offered to pay the Colombian government a royalty equivalent to 5% of the value of oil and gas produced from the area and commit to invest at least $5.3 million on exploration. The group was the sole bidder for Block 9.

For Block 10 the companies offered to pay the government 2% royalty on the value of any oil and gas that may eventually be produced frorm Block 10. The exploration commitment for Block 10 was also $5.3 million.

ONGC, through its overseas investment arm, ONGC Videsh Ltd., and Ecopetrol each own 50% of the venture.

Ecopetrol was the sole bidder for Block 11. The company offered to pay royalties equivalent to 3% of the value of oil and gas produced from the area and committed to spend at least $5.3 million in exploration. Ecopetrol was also the winner for Block 12. The royalty equivalent offer for this block was 15% and exploration investment was $5.3 million.

No bids were received for blocks 1, 2, 3 and 13.

Copyright (c) 2007 Dow Jones & Company, Inc.

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